oversight

Audit of BlueCross and BlueShield of Massachusetts

Published by the Office of Personnel Management, Office of Inspector General on 2016-08-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

  U.S. OFFICE OF PERSONNEL MANAGEMENT
     OFFICE OF THE INSPECTOR GENERAL
              OFFICE OF AUDITS




                Final Audit Report

             Audit of Blue Cross and Blue Shield of Massachusetts
                                            Report Number 1A-10-11-15-056
                                                    August 15, 2016




                                                             -- CAUTION --
This audit report has been distributed to Federal officials who are responsible for the administration of the audit program. This audit report may
contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available under the Freedom of
Information Act and made available to the public on the OIG webpage (http://www.opm.gov/our-inspector-general), caution needs to be exercised before
releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.
             EXECUTIVE SUMMARY 

                             Audit of Blue Cross and Blue Shield of Massachusetts

Report No. 1A-10-11-15-056                                                                          August 15, 2016

 Why Did We Conduct the Audit?             What Did We Find?

 The objectives of our audit were to       Our audit identified several minor incidents of erroneous claim
 determine whether Blue Cross and Blue     payments, but we do not believe that the errors are indicative of
 Shield of Massachusetts (Plan) charged    major systemic control problems. Therefore, we conclude the
 costs to the Federal Employees Health     Plan’s processing of FEHBP claims appears to be in compliance
 Benefits Program (FEHBP) and
                                           with the terms of its contract with the U.S Office of Personnel
 provided services to FEHBP members
                                           Management and industry standards. The report questions $83,805
 in accordance with the terms of its
 contract with the U.S. Office of
                                           in health benefit charges. The questioned health benefit charges
 Personnel Management. Specifically,       are summarized as follows:
 our objective was to determine whether
 the Plan complied with contract           A. 	Home Health Review
 provisions relative to claim payments.        	 The Plan incorrectly paid 281 claims containing home
                                                  health services, resulting in overcharges of $56,442 to the
 What Did We Audit?                               FEHBP.

 The Office of the Inspector General       B. 	Multiple Procedures Discount Review
 (OIG) has completed a limited scope           	 The Plan incorrectly paid eight claim lines that were billed
 audit of the FEHBP operations of Blue            when multiple services were performed on the same day,
 Cross and Blue Shield of                         resulting in overcharges of $14,592 to the FEHBP.
 Massachusetts. The audit covered Blue
 Cross and Blue Shield of Massachusetts    C. 	System Pricing Review
 claim payments from January 1, 2012            	 The Plan incorrectly paid four claims when FEP was the
 through June 30, 2015, as reported in              primary insurer, resulting in overcharges of $7,799 to the
 the Blue Cross and Blue Shield
                                                    FEHBP.
 Association’s Federal Employee
                                           D. 	Non-Participating Provider Review
 Program Government-wide Service
                                                The Plan incorrectly paid two claims to providers that are
 Benefit Plan Annual Accounting
 Statements.
                                                  not part of the Plan’s provider network, resulting in
                                                  overcharges of $4,972 to the FEHBP.




 _______________________
 Michael R. Esser
 Assistant Inspector General
 for Audits
                                                        i
              ABBREVIATIONS

Association     Blue Cross Blue Shield Association
BCBS            Blue Cross Blue Shield
CFR             Code of Federal Regulations
DO              Director’s Office
FEHB            Federal Employees Health Benefits
FEHBP           Federal Employees Health Benefits Program
FEP             Federal Employee Program
FEP OC          Federal Employee Program Operations Center
OBRA 93         Omnibus Budget Reconciliation Act of 1993
OIG             Office of the Inspector General
OPM             U.S. Office of Personnel Management
Plan            Blue Cross and Blue Shield of Massachusetts




                         ii
IV. MAJOR CONTRIBUTORS TO THIS REPORT
          TABLE OF CONTENTS

                                                                                                                        Page 

         EXECUTIVE SUMMARY ......................................................................................... i 


         ABBREVIATIONS ..................................................................................................... ii 


  I.     BACKGROUND ..........................................................................................................1 

  II.    OBJECTIVES, SCOPE, AND METHODOLOGY ..................................................3 

  III.   AUDIT FINDINGS AND RECOMMENDATIONS.................................................5

         A. Home Health Review ...............................................................................................5 

         B. Multiple Procedures Discount Review .....................................................................6 

         C. System Pricing Review ............................................................................................7 

         D. Non-Participating Provider Review .........................................................................8


  IV.    MAJOR CONTRIBUTORS TO THIS REPORT ..................................................11 


         APPENDIX: Blue Cross Blue Shield Association’s May 26, 2016 response
                   to the Draft Audit Report, issued April 11, 2016.

         REPORT FRAUD, WASTE, AND MISMANAGEMENT
            I. BACKGROUND
IV. MAJOR CONTRIBUTORS TO THIS REPORT

This final audit report details the findings, conclusions, and recommendations resulting from our
limited scope audit of the Federal Employees Health Benefits Program (FEHBP) operations at
Blue Cross and Blue Shield of Massachusetts (Plan). The Plan is located in Boston,
Massachusetts. The audit was performed by the U.S. Office of Personnel Management’s (OPM)
Office of the Inspector General (OIG), as authorized by the Inspector General Act of 1978, as
amended.

The FEHBP was established by the Federal Employees Health Benefits (FEHB) Act (Public Law
86-382), enacted on September 28, 1959. The FEHBP was created to provide health insurance
benefits for federal employees, annuitants, and dependents. OPM’s Healthcare and Insurance
Office has overall responsibility for administration of the FEHBP. The provisions of the FEHB
Act are implemented by OPM through regulations, which are codified in Title 5, Chapter 1, Part
890 of the Code of Federal Regulations (CFR). Health insurance coverage is made available
through contracts with various health insurance carriers.

The Blue Cross Blue Shield Association (Association), on behalf of participating Blue Cross and
Blue Shield (BCBS) plans, has entered into a Government-wide Service Benefit Plan contract
(CS 1039) with OPM to provide a health benefit plan authorized by the FEHB Act. The
Association delegates authority to participating local BCBS plans throughout the United States to
process the health benefit claims of its federal subscribers. There are 64 BCBS plans
participating in the FEHBP.

The Association has established a Federal Employee Program (FEP1) Director’s Office (DO) in
Washington, D.C. to provide centralized management for the Service Benefit Plan. The FEP DO
coordinates the administration of the contract with the Association, member BCBS plans, and
OPM.

The Association has also established an FEP Operations Center (OC). The activities of the FEP
OC are performed by CareFirst BlueCross BlueShield, located in Washington, D.C. These
activities include acting as fiscal intermediary between the Association and member plans,
verifying subscriber eligibility, approving or disapproving the reimbursement of local Plan
payments of FEHBP claims (using computerized system edits), maintaining a history file of all
FEHBP claims, and maintaining an accounting of all program funds.



1
  Throughout this report, when we refer to “FEP”, we are referring to the Service Benefit Plan lines of business at
the Plan. When we refer to the “FEHBP”, we are referring to the program that provides health benefits to federal
employees.



                                                          1                       Report No. 1A-10-11-15-056
Compliance with laws and regulations applicable to the FEHBP is the responsibility of the
Association and Plan management. Also, management of the Plan is responsible for establishing
and maintaining a system of internal controls.

The most recent audit report issued that covered claim payments for Blue Cross and Blue Shield
of Massachusetts was Report No. 1A-10-11-04-065, dated June 26, 2006. All findings from that
audit have been resolved.

The results of this audit were provided to the Plan in written audit inquiries; were discussed with
Plan and/or Association officials throughout the audit and at an exit conference; and were
presented in detail in a draft audit report, dated April 11, 2016. The Association’s comments
offered in response to the draft report were considered in preparing our final report and are
included as an Appendix to this report.




                                                 2                   Report No. 1A-10-11-15-056
II.
IV. OBJECTIVES, SCOPE, ANDTO
     MAJOR CONTRIBUTORS   METHODOLOGY
                             THIS REPORT
 Objectives
 The objectives of our audit were to determine whether the Plan charged costs to the FEHBP and
 provided services to FEHBP members in accordance with the terms of the contract. Specifically,
 our objective was to determine whether the Plan complied with contract provisions relative to
 health benefit payments.

 Scope and Methodology
 We conducted our limited scope performance audit in accordance with generally accepted
 government auditing standards. Those standards require that we plan and perform the audit to
 obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and
 conclusions based on our audit objectives. We believe that the evidence obtained provides a
 reasonable basis for our findings and conclusions based on our audit objectives.

 We reviewed the Blue Cross and Blue Shield Association’s Government-wide Service Benefit Plan
 FEP Annual Accounting Statements as they pertain to Plan codes 200 and 700 (BCBS of
 Massachusetts) for contract years 2012 through 2015. During this period, the Plan paid
 approximately $2 billion in health benefit charges (See Figure 1). From this universe, we
 judgmentally selected various samples. We reviewed 776 claims, totaling approximately $4.9
 million in payments, for the period January 1, 2012 through June 30, 2015, for proper adjudication.
 We used the FEHBP contract, the 2012 through 2015 Service Benefit Plan brochures, the Plan’s
 provider agreements, and the Association’s FEP Administrative Procedures Manual to determine
 the allowability of benefit payments. The results of these samples were not projected to the
 universe of claims.


                               Blue Cross Blue Shield of Massachusetts
                                       Health Benefit Charges
                             530
                             520
                $ Millions




                             510                                                   Health Benefit
                                                                                   Payments
                             500
                             490
                             480
                                   2012      2013       2014        2015


                                          Figure 1 – Health Benefit Charges




                                                         3                    Report No. 1A-10-11-15-056
In planning and conducting our audit, we obtained an understanding of the Plan’s internal control
structure to help determine the nature, timing, and extent of our auditing procedures. For those
areas selected, we primarily relied on substantive tests of transactions and not tests of controls.
Based on our testing, we did not identify any significant matters involving the Plan’s internal
control structure and its operations. However, since our audit would not necessarily disclose all
significant matters in the internal control structure, we do not express an opinion on the Plan’s
system of internal controls taken as a whole.

We also conducted tests to determine whether the Plan had complied with the contract and the
laws and regulations governing the FEHBP as they relate to claim payments. The results of our
tests indicate that, with respect to the items tested, the Plan did not fully comply with the
provisions of the contract relative to claim payments. Exceptions noted are explained in detail in
the “Audit Findings and Recommendations” section of this audit report. With respect to the
items not tested, nothing came to our attention that caused us to believe that the Plan had not
complied, in all material respects, with those provisions.

In conducting our audit, we relied to varying degrees on computer-generated data provided by
the FEP DO, the FEP OC, and the Plan. Through audits and a reconciliation process, we have
verified the reliability of the BCBS claims data in our data warehouse, which was used to
identify the universe of claims for each type of review. The BCBS claims data is provided to us
on a monthly basis by the FEP OC, and after a series of internal steps, uploaded into our data
warehouse. However, due to time constraints, we did not verify the reliability of the data
generated by the Plan’s local claims system. While utilizing the computer-generated data during
our audit, nothing came to our attention to cause us to doubt its reliability. We believe that the
data was sufficient to achieve our audit objectives.

Audit fieldwork was performed at our offices in Washington, D.C.; Cranberry Township,
Pennsylvania; and Jacksonville, Florida through March 2016.




                                                4                    Report No. 1A-10-11-15-056
  IV. AUDIT
III.   MAJORFINDINGS
             CONTRIBUTORS  TO THIS REPORT
                     AND RECOMMENDATIONS

A. Home Health Review                                                                       $56,442

  For the scope of January 1, 2012 through June 30, 2016, we identified all claims containing
  Home Health services. Based on our sample review, we identified a system error impacting one
  provider, Partners Healthcare. As a result, we reviewed all claims paid between March 1, 2015
  and October 31, 2015, for this provider. See Exhibit I for a summary of our Home Health
  Review.

                          Exhibit I – Summary of Home Health Review
     Universe of      Universe        Sampled        Sampled       Claims Paid       Total Claim
      Claims         Dollar Total      Claims       Dollar Total    in Error       Payment Errors
                      $                 381          $65,805            281            $56,442


  Sample selection Criteria:
   Randomly selected 100 claims stratified by facility bill type; and
   Selected all home health claims for Partners Healthcare reimbursed from March 1, 2015 to
     October 31, 2015.

  Cause of Error:
  Our review determined that the Plan’s local system was incorrectly paying one provider at billed
  charges, instead of applying the provider’s lower contracted rate. This was caused by a
  programming error during the implementation of a system enhancement in March 2015. The
  impact was limited to one home health provider, Partners Healthcare, for claims reimbursed after
  February 2015. As of February 5, 2016, the Plan has implemented system corrections and
  initiated recoveries on all claim payment errors.

  As a result of this review, we determined the Plan incorrectly paid 281 claims, resulting in
  overcharges of $56,442 to the FEHBP.

  Contract CS 1039, Part III, section 3.2 (b) (1) states, “The Carrier may charge a cost to the
  contract for a contract term if the cost is actual, allowable, allocable, and reasonable.”
  Additionally, Part II, section 2.3(g) states, “If the Carrier [or OPM] determines that a Member’s
  claim has been paid in error for any reason . . . the Carrier shall make a prompt and diligent
  effort to recover the erroneous payment . . . .”




                                                5                      Report No. 1A-10-11-15-056
   BCBS Association Response:

   “The Plan agrees that it incorrectly reimbursed claims totaling $56,442 to one contracted
   provider. . . . When the issue was identified, a processing work around was developed and
   implemented on July 17, 2015 to ensure that the claims were processing at the correct
   allowance. A system change was implemented on February 5, 2016 to correct this issue. . . .
   All claims impacted have been identified, corrected and overpayment recovery has been
   initiated to recover the overpayments. Any amounts recovered will be returned to the
   Program.”

   OIG Comments:

   As part of the audit resolution process, we recommend that the Plan provide OPM’s Healthcare
   and Insurance Office with evidence that these overpayments have been properly adjusted and
   returned to the FEHBP. This statement applies to all subsequent recommendations in this report
   where the Plan agrees to implement our recommendations.

   Recommendation 1

   We recommend that the contracting officer disallow $56,442 for claim overcharges and verify
   that the Plan returns all amounts recovered to the FEHBP.

B. Multiple Procedures Discount Review                                                   $14,592

   We reviewed a sample of claims that contained multiple procedures. In general, the Plan
   discounts the provider’s reimbursement rate when multiple services are performed on the same
   patient on the same day. See Exhibit II for a summary of our Multiple Procedures Discount
   Review.

                  Exhibit II – Summary of Multiple Procedures Discount Review
    Universe of     Universe       Sampled       Sampled        Claim Lines       Total Claim
    Claim Lines    Dollar Total   Claim Lines   Dollar Total    Paid in Error   Payment Errors

                   $                  139        $332,885             8             $14,592


   Sample Selection Criteria:
    Randomly selected 100 claim lines with amounts paid greater than $500; and




                                                 6                   Report No. 1A-10-11-15-056
   	 All claims lines subject to Omnibus Budget Reconciliation Act of 1993 (OBRA 93) pricing
      guidelines with amounts paid of $200 or more2.

   Cause of Errors:
   	 The Plan incorrectly paid seven claim lines due to a processor keying the wrong information,
      resulting in overcharges of $13,503 to the FEHBP.
   	 The FEP OC did not apply the Medicare multiple procedure discount to one OBRA 93 claim
      line, resulting in an overcharge of $1,089.

   As previously cited from CS 1039, costs charged to the FEHBP must be actual, allowable,
   allocable, and reasonable. If errors are identified, the Plan is required to make a diligent effort to
   recover the overpayments. Also, the recovery of any overpayment must be treated as an
   erroneous benefit payment, regardless of any time period limitations in the written provider
   agreement.

   BCBS Association Response:

   The Plan states, “[they] initiated recovery on confirmed overpayments and will return any
   funds recovered to the FEP Program.”

   Recommendation 2

   We recommend that the contracting officer disallow $14,592 for claim overcharges and verify
   that the Plan returns all amounts recovered to the FEHBP.

C. System Pricing Review 	                                                                                     $7,799

   For claims reimbursed during the period of July 1, 2012 through June 30, 2015, we reviewed a
   sample where the FEHBP paid as the primary insurer to ensure the Plan’s local system properly
   processed and priced these claims in accordance with the Plan’s provider contracts. See Exhibit
   III for a summary of our System Pricing Review.

                             Exhibit III – Summary of System Pricing Review
       Universe of      Universe           Sampled          Sampled           Claims Paid         Total Claim
       Claim Lines     Dollar Total         Claims         Dollar Total        in Error         Payment Errors
                      $                       160            $2,453,606             4                 $7,799



   2
    The OBRA 93 regulation limits the benefit payment for certain services to annuitants age 65 or older who are not
   covered under Medicare Part B and the FEHBP is required to limit the claim payment to the lesser of the Medicare
   Part B payment or billed charges.


                                                           7	                      Report No. 1A-10-11-15-056
   Sample Selection Criteria:
   We selected 160 claims that were stratified by place of service, such as provider’s office or
   inpatient hospital, and payment category, such as $50 to $99. Our sample was judgmentally
   determined by the number of sample items from each place of service stratum based on the
   stratum’s total claim dollars paid.

   Cause of Errors:
   The overpayments found in this review were due to manual processing errors such as the
   processor manually entering the incorrect percentage used to calculate the allowed amount.

   As previously cited from CS 1039, costs charged to the FEHBP must be actual, allowable,
   allocable, and reasonable. If errors are identified, the Plan is required to make a diligent effort to
   recover the overpayments. Also, the recovery of any overpayment must be treated as an
   erroneous benefit payment, regardless of any time period limitations in the written provider
   agreement.

   BCBS Association Response:

   The Plan states, “[they] initiated recovery on confirmed overpayments and will return any
   funds recovered to the FEP Program.”

   Recommendation 3

   We recommend that the contracting officer disallow $7,799 for claim overcharges and verify that
   the Plan returns all amounts recovered to the FEHBP.

D. Non-Participating Providers Review                                                              $4,972

   We reviewed a sample of claims paid to providers that are not a part of the Plan’s preferred
   provider network (non-par), to ensure the Plan is properly paying claims in accordance with the
   FEP non-par pricing guidelines. See Exhibit IV for a summary of our Non-Participating
   Providers Review.

                   Exhibit IV – Summary of Non-Participating Providers Review
    Universe of      Universe        Sampled         Sampled         Claims Paid        Total Claim
    Claim Lines     Dollar Total    Claim Lines     Dollar Total      in Error        Payment Errors
                    $                    28          $213,972             2               $4,972




                                                     8                    Report No. 1A-10-11-15-056
Sample selection Criteria:
 Selected all outpatient surgery claims where the amount paid was greater than or equal to the
   amount billed; and
 All inpatient claims where the amount paid was greater than or equal to the amount billed
   and the total claim amount paid was $9,000 or more.

Cause of Errors:
The Plan incorrectly paid two claims, totaling $4,972 in overcharges to the FEHBP, due to
manual processing errors. For one claim, the processor applied the incorrect provider
information during the pricing of the claim which caused the incorrect allowance to be applied.
For the other claim, the processor allowed the claim to process payment for a terminated
member.

Procedural Issue:
Our review determined that the Plan does not have policies or procedures in place to ensure that
that the claim amounts paid as recorded in the Plan’s local system equal the amounts paid
recorded in the Association’s FEP Express nation-wide claims processing system. For five
claims the Plan’s claim processors did not properly adjust the FEP Express system to reflect the
actual paid amount on the claims, resulting in variances of $76,073. These variances resulted in
an overstatement of the amounts paid in the FEP Express system and the health benefit charges
reported on the Blue Cross Blue Shield Association’s Government-wide Service Benefit Plan
Annual Accounting Statements (AAS). Since claims expense is considered when developing
premium rates, overstating the claims expense in the AAS may increase future rates.

As previously cited from CS 1039, costs charged to the FEHBP must be actual, allowable,
allocable, and reasonable. If errors are identified, the Plan is required to make a diligent effort to
recover the overpayments. Also, the recovery of any overpayment must be treated as an
erroneous benefit payment, regardless of any time period limitations in the written provider
agreement.

The FEP Administrative Manual, Volume III, Chapter 3 states, “Plans should have an internal
control system in place for FEP claim payments . . . Specifically, Plans should maintain internal
control systems to confirm . . . Claim adjustments made on the local Plan system are also made
on the FEPExpress system so the amount paid on both system agrees . . . .”

BCBS Association Response:

The Plan states, “[they] initiated recovery on confirmed overpayments and will return any
funds recovered to the FEP Program . . . .




                                                  9                    Report No. 1A-10-11-15-056
“BCBSMA [the Plan] corporate accounting is working with NASCO to implement a new
project in 2016 that will assist the Plan in performing reconciliations. NASCO will identify
records / claims that are out of balance and report them to the Plan, reducing the need for
manual effort by the Plans [to] perform reconciliations on a weekly and/or monthly basis.
The project is on target for implementation in November 2016.”

Recommendation 4

We recommend that the contracting officer disallow $4,972 for claim overcharges and verify that
the Plan returns all amounts recovered to the FEHBP.

Recommendation 5

We recommend that the contracting officer verify that the Plan implements the corrective actions
related to the procedural issue outlined in the Plan’s response to the draft report.




                                              10                   Report No. 1A-10-11-15-056
IV. MAJOR CONTRIBUTORS TO THIS REPORT
Information Systems Audits Group

            , Auditor-in-Charge

                         , Auditor




           , Senior Team Leader

             , Group Chief




                                     11   Report No. 1A-10-11-15-056
                                         APPENDIX 





May 26, 2016
                                                                  Federal Employee Program
                                                                  1310 G Street, N.W.
                                                                  Washington, D.C. 20005
Senior Team Leader                                                Phone # 202.942.1000
                                                                  Fax 202.942.1125
Claims & IT Audits Group
U.S. Office of Personnel Management
1900 E. Street, Room 6400
Washington, D.C. 20415-1100

Reference:	        OPM DRAFT AUDIT REPORT
                   Blue Cross Blue Shield of Massachusetts
                   Audit Report Number 1A-10-11-15-056
                   (Dated and Received April 11, 2016)

Dear              :
This is our response to the above referenced U.S. Office of Personnel Management
(OPM) Draft Audit Report covering the Federal Employees’ Health Benefits Program
(FEHBP) for Blue Cross Blue Shield of Massachusetts (Plan). Our comments
concerning the recommendations in this report are as follows:

HEALTH BENEFIT CHARGES

A. Home Health Review 	                                                           $56,442

   Recommendation 1

   We recommend that the contracting officer disallow $56,442 for claim 

   overcharges and verify that the Plan returns all amounts recovered to the 

   FEHBP. 


   Plan Response

   The Plan agrees that it incorrectly reimbursed claims totaling $56,442 to one
   contracted provider. From March 6, 2015 thru July 17, 2015, the Plan paid claims at
   charges rather than the network allowance due to a mapping error. When the issue
   was identified, a processing work around was developed and implemented on July



                                                             Report No. 1A-10-11-15-056
   17, 2015 to ensure that the claims were processing at the correct allowance. A
   system change was implemented on February 5, 2016 to correct this issue.

   The Plan would like to note that this issue was initially identified by BCBSMA
   through internal QA processes, prior to the OPM selecting the Home Healthcare
   sample. In accordance with BCBSMA internal procedures, efforts were immediately
   initiated to identify and mitigate the root cause, and to identify and correct all claims
   impacted by the issue. All claims impacted have been identified, corrected and
   overpayment recovery has been initiated to recover the overpayments. Any
   amounts recovered will be returned to the Program.

   A final impact assessment for this issue was provided to the OIG on March 24,
   2016.

B. 	 Multiple Procedures Discount Review                                           $17,784

   Recommendation 2
   We recommend that the contracting officer disallow $17,784 for claim overcharges
   and verify that the Plan returns all amounts recovered to the FEHBP.

   Plan Response

   The Plan agrees to overpayments totaling $14,592 and contests overpayments
   totaling $4,281. The Plan noted that:

   	 For one sample, totaling $13,503, the payment was not calculated correctly. The
      incorrect payment was the result of a manual processing error where the claim
      rejected lines as inclusive but the associate did not remove pricing on the claim
      lines, resulting in an overpayment of $13,503 to FEP. The associate has been
      educated and the claim adjusted to pay correctly.
   	 For one sample (sample #100), the Plan initially agreed was an overpayment;
      however, upon further review, the Plan determined that the claim processed
      correctly. Documentation to support that the claim was processed correctly was
      provided to the OIG on March 24, 2016.
   	 For one sample (OBRA’93 sample #30) the Plan continues to disagree that this
      was a processing error based upon the details of the Plan’s initial response. OIG
      continues to cite as an error for the full amount of the claim $3,018; however,
      only $1,089 paid in error; the difference relates to pro-rating of the claim payment
      that did not occur.

   The Plan initiated recovery on confirmed overpayments and will return any funds
   recovered to the FEP Program.




                                                                Report No. 1A-10-11-15-056
C.	 Non-Participating Providers Review                                           $10,781

   Recommendation 3

   We recommend that the contracting officer disallow $10,781 for claim 

   overcharges and verify that the Plan returns all amounts recovered to the 

   FEHBP. 


   Plan Response

   Plan agrees with overpayments totaling $4,972 and contests overpayments totaling
   $5,809. The Plan noted that:

   	 For sample 1, the Plan agrees that the claim was paid in error as the associate
      manually overrode the system edit and paid the claim for a termed member
      resulting in an FEP overpayment $4,388.
   	 For sample 2, the plan agrees that the claim was paid in error as the associate
      manually put the “P1” in the performing provider network status claim field. This
      resulted in the provider appearing as a preferred provider and the claim paid in-
      network benefits in error, resulting in an FEP overpayment of $584.
   	 For sample 21, Plan disagrees that a payment error totaling $5,809 occurred.
      The claim was processed correctly prior to the audit and was in review during the
      audit. A revised spreadsheet and screenshots of the finalized adjustment was
      provided to the OIG on March 24, 2016.

   The Plan initiated recovery on confirmed overpayments and will return any funds
   recovered to the FEP Program.

   Recommendation 4

   We recommend that the contracting officer require the Plan to implement a
   reconciliation process that ensures that the claim amounts paid in the Plan’s
   local system equals the amounts paid in the FEP Express system. Additionally,
   the contracting officer should ensure the Plan takes corrective actions to
   implement these procedures.

   Plan Response

   BCBSMA corporate accounting is working with NASCO to implement a new project
   in 2016 that will assist the Plan in performing reconciliations. NASCO will identify
   records / claims that are out of balance and report them to the Plan, reducing the
   need for manual effort by the Plans perform reconciliations on a weekly and/or
   monthly basis. The project is on target for implementation in November 2016.




                                                             Report No. 1A-10-11-15-056
D. System Pricing Review                                                        $7,799

Recommendation 5

We recommend that the contracting officer disallow $7,799 for claim overcharges and
verify that the Plan returns all amounts recovered to the FEHBP.

Plan Response
The Plan agrees with overpayments totaling $7,799. The Plan initiated recovery on the
confirmed overpayments and will return any funds recovered to the FEP Program.

We appreciate the opportunity to provide our response to each of the findings in this
report and request that our comments be included in their entirety and are made a part
of the Final Audit Report. If you have any questions, please contact me at
or                   at               .

Sincerely, 



            , CISA
Managing Director, FEP Program Assurance 
 
cc:                 , BCBSMA

 
 
 
 
 




                                                             Report No. 1A-10-11-15-056
                                                                                                                         



                                       Report Fraud, Waste, and
                                           Mismanagement 


                                                  Fraud, waste, and mismanagement in
                                               Government concerns everyone: Office of
                                                   the Inspector General staff, agency
                                                employees, and the general public. We
                                              actively solicit allegations of any inefficient
                                                    and wasteful practices, fraud, and
                                               mismanagement related to OPM programs
                                              and operations. You can report allegations
                                                          to us in several ways:


                        By Internet:               http://www.opm.gov/our-inspector-general/hotline-to-
                                                   report-fraud-waste-or-abuse


                         By Phone:                 Toll Free Number:                              (877) 499-7295
                                                   Washington Metro Area:                         (202) 606-2423


                           By Mail:                Office of the Inspector General
                                                   U.S. Office of Personnel Management
                                                   1900 E Street, NW
                                                   Room 6400
                                                   Washington, DC 20415-1100
                     
                                                                                                                         
                                                                                                                         




                                                             -- CAUTION --
This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit report may
contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available under the Freedom of
Information Act and made available to the public on the OIG webpage (http://www.opm.gov/our-inspector-general), caution needs to be exercised before
releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.